Web shop owners are beneficiaries, not victims

The sheer duplicitousness of some of our fellow citizens can take your breath away.

Never mind that the majority of Bahamians who voted in the referendum on whether to bring gambling out of the shadows and into the light decided it was best to keep it hiding in plain sight.

And never mind that voters chided Perry Christie and the PLP for ignoring that referendum and giving legitimacy to the ‘numbers boys’, it is mind-boggling how some have done a complete about-face and are fighting tooth and nail for the millionaire web shop owners to rake in even more profits.

Recently there was consternation from the usual suspects of functionaries and beneficiaries of the numbers boys’ largesse in one form or another (such as free cars, houses or campaign donations), who are incensed that the government is asking the gamers to pay their fair share in tax revenues in order to help us get our financial house in order.

Oh, the irony of some PLP politicians who now cry foul without once acknowledging their role in driving the economy into the ditch.

The former minister of tourism, Obie Wilchcombe, a patron saint of the numbers boys, accused the government of victimizing the web shop owners. Well mudda take sick!

If there are any ‘victims’ in the gambling business, it is surely not the numbers house and more likely the punters who bet their last grocery dollar on the dream of winning big the next time a number drops.

Calling multimillionaires victims is a bit nauseating. And we should not allow the debate to be ambushed by those who cry racism because the web shop owners are black while the operators of the hotel-based casinos are white, as are some of the legendary Bay Street Boys, some of whose millions once had the stench of booze and prohibition.

And there is a false equivalence between the government’s climb-down on a property tax assessment for wealthy land owners, such as those winter residents in Lyford Cay, and the imposition of higher taxes and fees on the higher earnings of the web shop operators.

For starters, there is an economic trade-off between the extra money that would flow into the Public Treasury from the increase in property taxes versus the economic benefits to both the treasury and to the country from the ancillary spending by part-time residents on things like year-round salaries for domestic staff, year-round payments for property maintenance and landscaping and increased consumption spending whenever they or their guests are in situ.

These specious arguments are old canards, and the likes of opposition leader Philip Brave Davis, the irrepressible gadfly legal beagle Wayne Munroe and even commentators like Philip Galanis ought to know better.

Wilchcombe claimed that web shop owners were being targeted. On that the entire chorus of naysayers should find agreement. So-called ‘sin taxes’ are the targets of every government on every inch of this planet.

Sin taxes, such as those imposed on booze; gambling; cigarettes; sugary drinks; marijuana where it is legal (and hopefully soon the indiscriminate use of plastics), are now common place.

Originally these taxes were not imposed to raise revenue for the treasury but rather to control the abuse of particular indulgences such as alcohol and gambling.

As early as 1643 the British began imposing a sin tax on distilled spirits such as rum and gin. The U.S. came late to the party taxing booze in 1791, banning alcohol altogether, then taxing it again after prohibition in 1933.

Gambling taxes did not start out at such. They were imposed as outright penalties to discourage the ‘sin’. But then the more people sinned, the more the gambling operators made, and the more they paid in taxes to the government.

Just three years ago casinos in Nevada paid $2 billion in taxes and fees making it the third-largest source of revenue for the government there behind sales tax and property tax. In fact, both sales and property taxes are kept lower for Nevadans (and help them avoid state income taxes altogether) because of the tax take from gambling.

We have never seen the books of any of our web shop operators but it’s a safe bet that they are not victims in this industry. In the U.S., even as their tax take increases, the gambling owners are still swimming in cash, even after they pay out prize money and a tiny portion on administration and overheads.

Our government budget tells us a lot about our priorities as a nation. It is both carrot and stick. We encourage certain behavior by granting tax incentives and we discourage other behavior by imposing additional taxes and fees. That has been standard practice in democracies.

There is the argument that taxing gambling is highly regressive and unfairly discriminates against poor people. But that argument falls flat on its face when the evidence shows that the lion’s share of the tax take comes out of the pockets of the owners of the web shops. They won’t refund it to the losing bettors if the government eliminated the tax.

So the real argument is about whether we want the tycoons who own and profit from gambling to pay their fair share. Sadly, neither higher taxes nor higher betting charges will significantly discourage people wagering on chance.

The debate we should be having is over the best rate for a tax on gambling houses, not whether we should be doing it. Taxes should not be so high as to run the operators out of business, or worse, to send the industry back into the shadows were the tax take would throttle back to zero.

The sweet spot is probably right where the government has proposed it, and that is what keeps the owners up at night. If they are able to pay the tax and still show that they are raking in millions, then the government may have it right for now.

The government should set a revenue target for all sin taxes, including gambling. And then back off.

Never mind our double talk in and outside of churches about opposing gambling in all its forms. It is here to stay, and so are the taxes we must impose on them.

For now, though, because the operators have taken the government to court over the tax, we’ll just have to wait to see what ‘fall’.